After a hiatus to research and write a long article about how technology affects the markets, I’m wondering if the pace of technological change and so-called “financial innovation” may really move at a pace that’s just too fast to regulate. Alan Greenspan argued this position for years. Paraphrasing Adam Smith in his 2007 autobiography, The Age of Turbulence, Greenspan said that, with rare exceptions, the markets seemed to adjust smoothly “as if guided by an international invisible hand.” And throughout his career as head of the Federal Reserve, he favored “financial innovation,” praising new financial “products” and technological changes for automating the markets. These innovations boosted productivity and increased general wealth, he argued. He believed that the type of regulation that prevailed for much of the twentieth century was simply too slow and cumbersome to work in such rapidly evolving markets. However, given his overall view was that markets needn’t be regulated very much at all, many saw his arguments as blatantly biased.Some Wall Street traders today, on the other hand, continue to echo Greenspan’s views about the power of technology and the irrelevance of regulation, but with far more self-interest and arrogance in evidence. Here’s how one trader responded to SEC Chair Mary Shapiro’s proposals to eliminate the inequities that result from flash trading, which is when institutions pay a fee to see orders before they are placed so they can try to profit from them using algorithms that trade in milliseconds. The trader declared:”We move faster, smarter, and understand risks better than other investors.” And he scoffed at efforts to curb Wall Street’s activities: “I’m not concerned. Profits have always flowed to whoever dominates the marketplace, and we have the technological advantage that it costs millions to match.” Those comments were made just last spring.And expert observers continue to see technology as a powerful but also a potentially destabilizing influence, where some can manipulate the markets to their advantage. Thomas Peterffly, chief executive of Interactive Brokers, which is one of the largest brokerage companies in the country, expressed his concern this way: “What we have today is a complete mess. Over the last 10 years, technology delivered great benefits, but in the last year or so, it is not so good. There is more room for the various games some people play.” One SEC official also recently commented that while they are learning something from watching the aberrant behavior in individual stocks, “so far it is hard to extrapolate too much as to the general trends in the market.”What it seems we are learning is that, with so many complex technologies in play, we just may not know what’s going to go wrong next—or why.